Limitation defence and reduced demand justified waiver of balance pre-deposit, with recovery stayed subject to deposit condition.

A substantial limitation defence, supported by the record that service tax was already being paid under the relevant heads and that the department knew the material facts, justified interim waiver of the balance pre-deposit. The reduced demand, following dropping of proceedings on three charges by another Commissionerate, further supported the plea that the extended limitation period was not readily invocable. On that basis, stay of recovery was granted at the interim stage, subject to the appellant depositing Rs. 50,00,000 within three months to safeguard revenue.

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Issues: Whether the appellant had made out a prima facie case for waiver of the balance pre-deposit and stay of recovery, having regard to the plea of limitation and the reduced demand.

Analysis: The appellant was already paying service tax under the relevant heads and the record indicated that the departmental authorities were aware of the relevant details. The demands also stood reduced in view of the dropping of proceedings on three charges by another Commissionerate. On this material, the plea that the larger period was not readily invocable and that the appellant had a substantial limitation defence was found acceptable at the interim stage. The appellant also offered to deposit a substantial sum to safeguard the revenue.

Conclusion: The appellant was granted waiver of the balance pre-deposit and stay of recovery on condition of depositing Rs. 50,00,000 within three months.

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